It is an undeniable fact that COVID-19 has put unprecedented pressure on real estate operations across the globe. In the UK, house prices fell for the third month in a row in May, while property consultant Knight Frank expects prime residential real estate prices in Mumbai to fall 5 per cent this year and 3 per cent next year. In the US, however, there are some encouraging signs of recovery as home prices begin to rise, having reached a low point in mid-April, according to realtor.com.
Similarly, in the UAE, the softening of restrictions put in place to combat Covid-19 have had a positive impact on market sentiment across the real estate sector, according to data from Property Finder and Mortgage Finder.
So, while there is little doubt that the industry will eventually recover, the consensus is that real estate businesses that are in the position to embrace technology will be better placed to ‘fix’ their operations in order to survive. Although the proptech industry has experienced accelerated growth in the last several years; it seems that now is the time for full engagement for sustainable long-term growth well beyond recovery from the pandemic.
According to global law firm Goodwin Procter LLP, technology may be the x-factor in the real estate industry’s road to recovery. Though the health crisis has and will continue to temporarily slow momentum when the economic environment stabilizes and rebounds, proptech will emerge with more explosive growth, the firm said in a recent commentary on their website.
“This is a time to reflect on key aspects of the proptech industry’s success in recent years and to recognize where real estate companies can capitalize on those proof-of-concept technology-driven models to rebuild for the future,” the firm says.
Meanwhile, a recent report by JLL has examined the various short-to-mid and long-term strategies and trends that are likely to shape the real estate industry in a post-COVID-19 era. According to JLL’s head of research for MENA, Dana Salbak, deploying technologies that create a differentiated customer experience and support investors and landlords in understanding their asset better, will ensure asset resilience and longevity.
“If there is one change COVID-19 has rapidly ushered in, it is the deployment of technologies in aid of remote working and collaboration to ensure business continuity,” she explains. “While the region is yet to return to some level of normalisation in business activity, there is no doubt that various technologies, if adopted, can ensure the sustainability and longevity of assets and operations.”
Looking beyond cloud computing and shared networks, while corporates might be inclined to adopt some level of remote working as a long-term strategy to mitigate risks and reduce costs, there is no doubt that as individuals we will continue to seek some level of human interaction. Rather than becoming obsolete, however, JLL expects future office spaces to offer more of a collaborative and social experience, rather than just a place to work. This includes modifying the design and layout of office spaces to address employee needs, in addition to adopting health and wellness standards (such as the WELL Building Standard Certification), and sustainability practices that ensure the wellbeing of employees. This involves the adoption of various technologies that ensure all of the above.
The report outlines how landlords and corporate occupiers are expected to implement new health-related technologies such as thermal imaging cameras, automatic digitized elevators, and building control systems. From a landlord’s perspective, being able to understand your building and drawing analyses and conclusions can aid in decision-making, whether pre-empting additional costs or understanding the overall performance and market positioning.
“Utilising GIS technology, for example, to offer 3D replicas of the physical asset (Digital Twin) will reveal details of your space and can even benchmark your asset’s performance against the surrounding area or wider market,” Salbak says. “Similarly, technologies such as sensors can be deployed to understand the day-to-day performance of the asset. When accessible to potential investors, they are better able to assess the health of the property, and track metrics such as footfall, occupancy rates, and efficiency rates.”
Overall, the proptech industry growth is expected to pick up the pace when the coronavirus crisis lifts, as even those that were hesitant to make investments in technology before the crisis are now more convinced of the role that technology can play in transforming a business. Proptech is now an integral part of the industry, and each proptech solution can boost efficiencies, improves client experiences and bring new and recurring business.